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In this chapter, we focus on reviewing key aspects of creating and managing various types of procurement contracts and documents. As a procurement professional, you are required to understand the nature and purpose of contracts and what constitutes a legally binding obligation. You will also need to become familiar with a variety of standard elements that are required for contracts and what types of contracts should be used in any particular procurement transaction.

As you probably know by this time, forming and administering contracts covers a broad range of the department's responsibilities and constitutes a major investment of required talent. Problems with document verbiage, issues regarding unclear specifications, lack of supplier performance, and unseen financial obligations plague many organizations. The vast majority of these contractual problems, however, can be reduced or even eliminated by establishing clear process requirements for developing them and ensuring they receive appropriate approval and legal review.

Properly administering purchase orders (POs) and contracts also requires close attention to detail so that the supplier's compliance with the terms and conditions adds the full measure of value that was originally intended by the organization. This often involves resolving discrepancies and expediting deliveries, as well as handling disputes and contractual violations. Establishing procurement policies ...

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